If you wound up owing the IRS money this past tax season, there’s a few payment options available to get it taken care of before next tax season creeps up on you:
- Pay Up! As with any bill out there, the best option is to just pay it all right away. It saves you more money in the long run, and you won’t be in a position where you’re worrying about it, or worse: forgetting about it! If you’re not really in a position to pay it all upfront, pay as much as you realistically can in order to avoid high interest rates and penalties.
- Let the IRS Help You: The IRS’ Direct Pay Tool allows you to pay your bill online directly from your checking or savings account. Plus it’s free! Here’s a link to get started: Direct Pay Tool
- Buy Some Time: If you’d like to apply for a short-term extension, give the number on your bill a call, or apply online at IRS.gov. There’s usually no set-up fee and it will give you a bit of extra time to get your finances in order.
- Plan it Out: If you’d prefer to set up a direct debit payment plan, you can apply online at IRS.gov for this as well. This is basically the best option out there for those who need more time and owe less than $50,000. Not only is this option more convenient, but you won’t have to mail in any checks and the start-up fee is pretty low.
- Meet in the Middle: “An Offer in Compromise” lets you settle your tax debt for less than the full amount that you owe”. If paying your entire bill is just not feasible right now, or could jeopardize your finances, an Offer in Compromise is a good alternative. Check out the OIC Pre-Qualifier tool and see if this option is available to you.
- Change Your Fate: Have more taxes withheld from your paycheck to avoid having to owe the IRS next round by using the new Form W-4, or Form 1040-ES if you’re an independent contractor.
Always make an effort to handle payments to the IRS as quickly and professionally as possible. Document as much as you can, and use your best judgment when it comes to how much you can reasonably pay.
Paragon Accountants is here to help you plan, profit, or pay for every tax season! Give us a call if you need some help.
